Pandemic drives down first quarter sales

Pandemic drives down first quarter sales

Saint-Gobain’s first quarter 2020 sales of €9362 million are down 4.9% on a like-for-like basis. Although volumes contracted by 5.5% as a result of disruptions related to the Coronavirus pandemic, with very different situations from one country to the next, prices are reported to be holding up well, up 0.6% in a slightly inflationary cost environment. 

Prioritising the health and safety of employees and other stakeholders, the group is working to achieve operational continuity in every country by adapting to changes in demand, depending on the health situation and on local government decisions. Saint-Gobain’s automotive activities have significantly adjusted their production and with the exception of China, which has seen operations resume, are manufacturing very small volumes in the light of plant shutdowns by customers.

These activities are expected to gradually resume in line with a recovery in automotive production. 

Adjustments were also made in other activities serving industrial markets, although most sites remain operational and continue to serve customers. After hitting a low point in the second quarter, all industrial activities are expected see a gradual recovery. Elsewhere, the construction industry and life sciences businesses continue to show further growth. 

Disruptions across northern Europe vary widely from one country to the next. While Nordic countries, Germany and Eastern Europe all reported a good level of trading in the first quarter and remain, relatively speaking, little affected, the UK has been at a virtual standstill since the end of March and is in the process of starting up again. 

In southern Europe, the Middle East and Africa, substantial disruptions have been apparent, although trends point to a gradual resumption of business. After a shutdown of several days in France in March so that new operating and health procedures could be put in place, the majority of distribution outlets have reopened and reported a constant improvement in trading, up from 25% of 2019 levels at the end of March to more than 50% by mid-April, in line with industrial activities. Most of Italy remains shut down, while operations have resumed in Spain.

Operations in the Netherlands remain relatively unaffected, while the Middle East and Africa have been impacted in varying degrees. After significant disruptions in the second quarter, construction markets should show a substantial improvement. 

Saint-Gobain reports a mixed situation across North America, depending on each state, with business slowing in April but almost all plants generally able to continue operating, with the construction sector often considered an essential industry. 

Latin America is trading at approximately 40% of its 2019 level, with the situation varying widely depending on the business and type of market; after coming to an abrupt halt at the end of March, the construction sector is ramping up again in Brazil. After an overall decline in the second quarter, markets are expected to return to some degree of normality. 

After the gradual restart of all Saint-Gobain production sites in China in March, construction sales in the country accelerated and at mid-April, had reached the level recorded for the same period in 2019. India remains at a standstill. Other Asian countries have seen varying degrees of disruption, which are limited in Thailand and Vietnam. After a challenging second quarter outside China, Asia-Pacific is slated to show a substantial improvement.

Given the impact of the global economic crisis caused by the Coronavirus, the group expects a challenging second quarter 2020, before a recovery in the second half. 

www.saint-gobain.com

Published: 
26/05/2020

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